By: Nic Haralambous
“Bootstrapping your idea” is a series of 6 articles by serial entrepreneur and LifeCheq client Nic Haralambous. Nic has to date started 8 separate businesses, including a social network, a campus newspaper, a retail fashion company and, at one point, a rock band. In this amusing and insightful series, written exclusively for LifeCheq, he shares the most important lessons he has taken away from both his successes and failures. A must-read for the aspirant entrepreneur, or anyone who wants to take their passion project to the next level.
Every person I have ever met has an idea for something they would like to build, create, sell, launch, turn into an app or just see come to life. It’s human nature to want to make stuff. There are various problems with almost all of the ideas I talk to people about. It’s a tough thing to have to tell someone that their idea is not going to work. So before you and I have that conversation in person one day, let me give you some insight into the best way to think through an idea you have and then the best way to take the idea from zero to one.
The first step is always the hardest but let me burst your bubble: an idea is not the first step, it’s the step before the step before the first step.
Let’s clear something up right now, if you had your revolutionary idea in the shower then it’s probably no good. Trust me, you did not come up with a new way to extract water from stones while you were shampooing your beard. The only caveat I have for this statement is that if you have been working on trying to extract water from stone for a decade then you may just have a breakthrough in the shower one morning. If you’ve never tried to extract water from stone yet and one Tuesday morning, you ponder this conundrum while in the shower, there is almost no chance you’ve magically stumbled on a groundbreaking discovery. That’s not how discoveries are made. Most of the time these kinds of discoveries are made through decades of research, testing and iterations on a premise.
Now that this is out of the way, ask yourself: Did I come up with my idea in the shower for an industry I know nothing about? If your answer to this question is “yes”, then it’s best you move on to a new idea.
This brings me to my first real piece of advice. Stick to your domain of expertise. If you have been working in the orange farming industry for 20 years then you are most likely going to come up with a new business idea in this space. You are probably not going to come up with a new way to improve the mileage of a Tesla running on battery power.
Now let’s distinguish between revolutionary ideas and business ideas. The two are not dependant on one another. Some of the most successful business people I know have never had a new idea in their lives. Not all businesses are born from a new idea. A lot of the time people take what exists already and they implement them more efficiently or cheaply. Out of this one tweak to an existing business, they are able to create an entirely new business. Think of the way McDonald’s took a pre-existing food (the burger) and did it faster. That was it. Ray Kroc simply took the McDonald’s brothers methodology for assembling a burger and expanded it into many, many restaurants. The burger itself is not new.
The Idea Checklist
When you come up with an idea there are a few things to do before you get excited:
Google it. I literally want you to go to google.com and type in exactly what your idea is. For example: “the best way to retread a tyre”. Then go through the search results. Watch the videos and see if you’re the only person thinking about this. Understand the industry. Do you know what it’s actually going to take to build this thing that you’ve just come up with? If not, call someone who is in the industry. Ask to buy them a coffee and chat to them about their business model. Find out who is competing in this space. Seek out your competitors, list them and then pit them against one another and your new idea/business/method. Is yours better? Cheaper? Faster? No? Then reconsider this. Does your idea scale? Is this something you are going to be able to build into a big business? Or is it a nice side-hustle that generates a small amount of money that you save every month? This step is absolutely key. Understanding how this idea grows is imperative to figuring out if you want to dedicate the next 20 years of your life to building it. If you can see this being something you love to do and it gives you enough room to scale then you should push on. Do you need capital or is this a bootstrapped business? If it’s bootstrapped, then just get started. If it needs capital then you better start planning to raise some money.
Now that you’ve thought in more detail about your idea, how it’s going to work, how it’s going to be funded and whether it can scale you probably have a better idea of whether you want to carry on with it or start on something new.
In my experience there are two very simple types of businesses that you your idea can fit into.
The Bootstrapped Side-Hustle
The bootstrapped side-hustle is a great way to dip your toes into building a business. I’ve started some of my most enjoyable and profitable businesses with a tiny amount of capital (less than R10 000) and these grew into multi-million rand businesses over time. This kind of business is a slow burn, patient, cautious experiment. You’ll invest no more money than you can afford out of your monthly salary and slowly, over time turn your money from capital into product and then into sales.
To move from zero to one here you will need to prototype your idea into a real product. If you haven’t yet, I suggest every new entrepreneur reads a book called The Lean Startup by Eric Ries. Eric coined the phrase Minimal Viable Product (MVP). An MVP in the business world is the simplest iteration of your idea that you can take to market. This is a key concept. In the past, entrepreneurs would spend millions of rands developing an idea from nothing into a perfectly refined product that is then taken to market and thrown to the wolves. This is a shockingly dangerous way to build anything because you aren’t learning anything along the way.
If you adopt the MVP method then you take the simplest form of your idea and you try to sell it. People then give you feedback that you can learn from, take back to the drawing board and iterate with. This might even mean you don’t create the product but you sell the future product that might exist. If you are confident that people want it, then go to those potential customers, tell them that your product is in the pipeline and ask them for feedback. Once you have eliminated uncertainty and know for sure that your product has a market fit then you can start creating the first iteration.
There is one important piece of advice that I would like to share with you: Do not spend years and millions of rands building the product you think the market wants. You do not know what the market wants. You might create a guitar cover that you’ve always wanted and when you sell them you find people use them to store cushions in their homes. You have just discovered that people actually want something to put their cushions in and your guitar cover was close to the right shape, but no one actually wanted a guitar cover. If you had built an MVP of your idea and sold just ten you would have learned that lesson really quickly.
This concept allows you to iterate rapidly, build stuff, talk to customers and engage with your idea at your own pace. I like the MVP methodology so much because it’s hands on and iterative. There are very short feedback loops if you want to engage in them.
The take away from this section is to do. Just do something with your idea. You could die telling people that you had the best way ever to cut a steak but because you never tried it out, all you’ll be doing is talking, but not actually showing any results.
The Raise a Ton of Money Method
One of the funniest requests that I receive from budding entrepreneurs is an introduction to an investor because they have “the next billion dollar idea”. I have actually received emails with that as the subject. People try to sell me on an idea. Just about every idea I’ve ever had has been a derivative or a copy of something else that is out there. What makes me push on is my belief that yes there is someone else out there doing what I want to do but I can do it better, faster, harder, cheaper, smarter or some other way that will crush them.
It’s this insane belief that keeps driving most entrepreneurs.
However, at some point in your budding business you may just want to take your idea from MVP to blast off with a capital investment. Unfortunately for you, we no longer live in a world where people are handing out millions of rands in funding for a business plan. What you are going to need is a prototype or, you guessed it, an MVP.
Do you know what kinds of business raise the most impressive kinds of money? Profitable businesses or at the very least a business with traction.
What is traction? If you have built out an MVP and have sold a 1000 units of your product with some effort and are at the very least breaking even, then you have some traction to work with. However if you’ve never sold a thing, you don’t have a product, you have “the next billion dollar idea” with no traction. In fact, you have less than nothing because in the eyes of an investor you are asking them to put everything in. They are putting in the capital to pay for your salary, the product prototype and the marketing of the product. Ultimately it would be them taking on all of the risk and you simply coming along for the ride because you had the idea.
Once you’re at this point you have already lost the battle because if the investor likes your idea they can just go out and find a competitor already doing what you want to do and invest in them. Why? Because there are very, very few new ideas.
Investors look for great founders and entrepreneurs, not great ideas. The truth is that the idea only gets you so far. Once you have built your product and take it to market the hard work starts. Selling is often where the difficulty lies.
So I’m going to go back to the MVP. Build something and take it to market, get some lessons, gain some traction and if you start to see a spark fly, then you should start hunting for funding if that’s the route you want to go.
Before you go out and raise funding just ask yourself if you believe this business can scale globally and really rake in the cash. If it can, then go for it. If not, then I suggest you slowly build your business into a profitable entity and enjoy the freedom that profit brings with it.
Failure Before You Begin
Broadly speaking, the reason that most people don’t build out their ideas into something more meaningful is because they are scared that their idea is just that: an idea. For me, respect is earned in the building of things. Literally everyone has what they believe to be a million dollar idea. Yet there are very few millionaires in the world compared to the total population. Most people are too scared to risk failure and the social damage that may come with it.
In my career as an entrepreneur I’ve excelled at mostly one thing; failing. The reason I continue to build businesses is because I don’t consider failure as an end point. I see failure as a point of departure. If I have failed it’s because there was something flawed in my methodology so let me review, learn and try again. To me failing is learning. As soon as I realised that this was my worldview, everything changed. Failure became a goal for me. The quicker I can get to a point of failure then the quicker I can figure out if what I am doing is working or not.
When I was 21 years old (back in 2005), I built a social network for students. This is around about a year after the mighty Facebook was founded and back then it was called thefacebook.com. We were extremely early in the market but had very little market adoption because our market was South African students who were at University and we had a pretty weak platform in terms of the technology. That didn’t stop me and my two business partners from giving it a good go. One of us would be building the tech while the other was out raising money and the third person was on campus recruiting users. It was a full on hustle for us.
After a few months of working on this social network we had found a tiny bit of traction. We had users and were enticing advertisers. We had also managed to hook an investor and closed a small seed round of funding to the sum of R100 000. Very shortly after receiving the money in our bank account we gave it right back. It could have been less than a week. We didn’t spend a cent of it. Truth be told, we had no cooking clue what we were doing. So instead of blowing someone else’s money we decided to give it back. We shut the business down after that. It was a tough lesson to learn but a really good one. We had failed but I had learned that if you don’t know what you’re doing, sometimes it’s best to just admit it, take the lesson and move on.
Here’s the funny thing about failure – there is no social damage that comes with it because most people are just like you and scared of failure. So if you take the leap, build something, try it, fail and then learn something you are already ahead of most people out there.